I know we have only just welcomed in the New Year, but with so many economic commentators suggesting 2015 as a likely time for an interest rate rise, my top tip is for borrowers to look at their mortgages in 2014, as lenders will no doubt start to eek up their rates this year.
Behind the scenes, lenders will be factoring in an increase next year, and starting to price their mortgage products accordingly. I think the reality is that the record low mortgage deals currently available are not set to last.
A quick analysis of the likely increase in repayments shows that a rise in rates of just 0.5% on a typical mortgage worth the UK average of £150,000 would amount to an extra £62.50 per month which equates to a not insignificant £750 per year increase in mortgage bills.
So many borrowers finished their fixed rates ages ago and have been coasting along on their lender’s standard variable rate (SVR). The clue about SVRs is the V (variable) – it varies, so can go up at any time. If you are lucky enough to have an SVR which is linked to the Bank of England base rate, any increase in your SVR will be exactly the same as any base rate increases. Most borrowers, however are on an SVR which is set by the lender, so can go up (and down) as the lender chooses and without any warning.
Borrowers, should therefore look at their options now, while fixed are still incredibly low. Existing borrowers with 40% equity in their property can secure a 2 year fixed rate at 1.74% and for those with only 25% the lowest rate is 1.99%. Personally, I think it’s time to nail down a decent 5 year fixed rate, and today’s best deal is a gobsmacking 2.95%.
Of course not everyone will fit to the criteria, but there is definitely something for everyone who acts now.
It’s crucial that you talk to an Independent Mortgage Consultant, who can find the best deal to suit your circumstances and pocket. Different lenders have different rules on just about everything, so some expert guidance is essential.
For more information speak to a Mortgage Adviser on 01628 807477 or contact us.
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